Expenses recognised in restructuring costs – banking activities

26

5

31

Liabilities recognised in other liabilities

50

141

Quanto stock scheme

605

215

Deferred bonus scheme

77

21

732

377

Further details on the group’s share incentive schemes are provided below:

Share options and appreciation rights

Standard Bank Group has two equity-settled schemes, namely the Group Share Incentive Scheme and the Equity Growth Scheme. The
Group Share Incentive Scheme confers rights to employees to acquire ordinary shares at the value of the Standard Bank Group share
price at the date the option is granted. The Equity Growth Scheme was implemented in 2005 and allocates appreciation rights to
employees. The eventual value of the right is settled by receipt of value of shares equivalent to the full value of the rights.

The two schemes have three different sub-types of vesting categories as illustrated by the table below:

Vesting category

Year

% vesting

Expiry

Type A

3, 4, 5

50, 75, 100

10 years

Type B

5, 6, 7

50, 75, 100

10 years

Type C

2, 3, 4

50, 75, 100

10 years

Refer to the remuneration report for a detailed schedule of movements in share options issued to the executive
directors during the year. A reconciliation of the movement of all share options and appreciation rights is detailed below:

Option price
range (rand)

Number

Group Share Incentive Scheme

2010

2010

2009

Reconciliation

Options outstanding at beginning of the year

19 123 282

22 862 850

Granted

102,00 – 114,60

2 606 250

2 453 900

Exercised

25,00 – 98,00

(5 762 232)

(5 878 968)

Lapsed

27,81 – 111,94

(862 950)

(314 500)

Options outstanding at end of the year

15 104 350

19 123 282

Share options were exercised regularly throughout the period. The weighted average share price for the year was R107,49
(2009: R86,14).

The following options granted to employees, including executive directors, had not been exercised at 31 December 2010:

Number of ordinary
shares

Option price range (rand)

Weighted average
exercise price (rand)

Option expiry period

724 400

30,90 – 33,50

31,45

Year to 31 December 2011

779 100

27,80 – 35,70

28,12

Year to 31 December 2012

1 579 500

27,70 – 32,19

27,93

Year to 31 December 2013

2 625 250

39,90 – 50,91

40,90

Year to 31 December 2014

419 500

64,27 – 65,60

65,47

Year to 31 December 2015

1 006 300

76,40 – 85,80

79,53

Year to 31 December 2016

960 400

97,95 – 107,91

98,45

Year to 31 December 2017

2 314 100

89,00 – 92,00

91,81

Year to 31 December 2018

2 205 800

62,39 – 98,20

62,98

Year to 31 December 2019

2 490 000

102,00 – 114,60

111,00

Year to 31 December 2020

15 104 350

The following options granted to employees, including executive directors, had not been exercised at 31 December 2009:

Number of ordinary shares

Option price range (rand)

Weighted average
exercise price (rand)

Option expiry period

552 800

25,00 – 28,15

25,64

Year to 31 December 2010

2 675 732

30,90 – 35,90

31,90

Year to 31 December 2011

1 251 700

27,80 – 35,70

28,10

Year to 31 December 2012

2 542 700

27,70 – 32,19

27,93

Year to 31 December 2013

3 921 150

39,90 – 62,00

40,90

Year to 31 December 2014

616 000

59,90 – 65,60

65,24

Year to 31 December 2015

1 236 600

76,40 – 85,80

79,53

Year to 31 December 2016

1 196 100

97,95 – 107,91

98,36

Year to 31 December 2017

2 736 000

76,30 – 92,00

91,72

Year to 31 December 2018

2 394 500

62,39 – 98,20

62,93

Year to 31 December 2019

19 123 282

The share options granted during the year were valued using a Black-Scholes option pricing model. Each grant was valued separately.
The weighted fair value of the options granted per vesting type and the assumptions utilised are illustrated below.

Type A

Type B

2010

2009

2010

2009

Number of options granted

1 516 000

1 518 700

1 090 250

935 200

Weighted average fair value at grant date (R)

39,68

22,07

41,42

23,01

The principle inputs are as follows:

Weighted average share price (R)

111,17

62,91

110,86

63,06

Weighted average exercise price (R)

111,17

62,91

110,86

63,06

Expected life (years)

5,9

6,1

6,9

7,0

Expected volatility (%)

35,7-38,1

35,5-38,8

35,7-38,1

35,5-38,8

Risk-free interest rate (%)

7,1-8,7

8,0-8,8

7,2-8,8

8,3-8,8

Dividend yield (%)

3,7

3,8

3,7

3,8

The options granted during the year which are expected to vest, have an estimated fair value of R79 million (2009: R41 million).

Price range (rand)

Number

Equity Growth Scheme

2010

2010

2009

Reconciliation

Rights outstanding at beginning of the year

41 257 077

31 294 711

Granted

102,00 – 116,80

11 724 941

12 655 000

Exercised1

101,30 – 118,00

(2 524 982)

(639 106)

Lapsed

60,35 – 117,30

(3 293 123)

(2 053 528)

Rights outstanding at end of the year2

47 163 913

41 257 077

1

During the year 529 137 (2009: 122 328) Standard Bank Group shares were issued to settle the appreciated rights value.

2

At the end of the year the group would need to issue 9 400 489 (2009: 9 113 514) Standard Bank Group shares to settle the outstanding appreciated rights value.

The group is required to pay employees tax arising from benefits due in terms of the scheme in accordance with the Fourth Schedule of
the Income Tax Act in South Africa. Where employees have elected not to fund the tax from their own resources the tax due is treated
as a partial realisation of the gross benefits due under the scheme. 487 285 (2009: 8 290) Standard Bank Group shares were issued
and sold to settle the employees tax due during the year. This amount settled reduces the liability due in respect of the outstanding
appreciated rights value.

The following rights granted to employees, including executive directors, had not been exercised at 31 December 2010:

Number of rights

Price range (rand)

Weighted average
exercise price (rand)

Expiry period

3 621 599

60,35 – 69,50

65,41

Year to 31 December 2015

5 753 956

76,40 – 87,00

79,65

Year to 31 December 2016

4 951 517

94,50 – 117,30

98,41

Year to 31 December 2017

10 729 850

69,99 – 100,08

91,80

Year to 31 December 2018

11 085 800

62,39 – 99,00

64,21

Year to 31 December 2019

11 021 191

102,00 – 116,80

111,36

Year to 31 December 2020

47 163 913

The following rights granted to employees, including executive directors, had not been exercised at 31 December 2009:

Number of rights

Price range (rand)

Weighted average
exercise price (rand)

Expiry period

4 860 325

60,35 – 70,00

65,42

Year to 31 December 2015

6 616 302

74,00 – 87,00

79,62

Year to 31 December 2016

5 705 800

94,50 – 117,30

98,45

Year to 31 December 2017

11 782 550

69,99 – 100,08

91,78

Year to 31 December 2018

12 292 100

62,39 – 100,00

64,43

Year to 31 December 2019

41 257 077

The share appreciation rights granted during the year were valued using a Black-Scholes option pricing model. Each grant was valued
separately. The weighted fair value of the options granted per vesting type and the assumptions utilised are illustrated below:

Type A

Type B

2010

2009

2010

2009

Number of appreciation rights granted

6 986 053

8 236 500

4 738 888

4 418 500

Weighted average fair value at grant date (R)

39,85

22,50

41,73

23,81

The principle inputs are as follows:

Weighted average share price (R)

111,39

64,02

111,26

65,06

Weighted average exercise price (R)

111,39

64,02

111,26

65,06

Expected life (years)

5,9

6,1

6,9

7,0

Expected volatility (%)

35,5 – 38,3

35,5 – 38,8

35,5 – 38,3

35,5-38,8

Risk-free interest rate (%)

6,9-8,8

7,7-9,0

7,0-8,9

7,7-9,1

Dividend yield (%)

3,7

3,8

3,7

3,8

The appreciation rights granted during the year which are estimated to vest, have a fair value of R356 million (2009: R218 million).

Liberty has similar share-based payment transactions and has recognised a total expense of R50 million (2009: R52 million) relating to
the share-based payments, comprising of R49 million (2009: R51 million) for share options and R1 million (2009: R1 million) relating
to the Standard Bank Group employee scheme.

SIH long-term incentive scheme

SIH has a long-term incentive scheme whereby certain employees, including certain executive directors of the group, are granted
notional ‘shadow’ share options. The scheme provides for eligible employees to be rewarded in cash, the value of which is derived
from current and future performance of SIH. Throughout the life of the scheme, the liability is valued based on a defined formula. The
notional share options which have a 10-year life are generally first exercisable in a one-month period, the month after the month in
which the group’s financial statements are approved, 50% after three years, up to 75% after four years and 100% after five years.
Exercise thereafter may take place in the month after the month in which the final or interim accounts of the group are approved up
until the expiry of the shadow share options.

Up until March 2004 the scheme options were underpinned by share options issued by Standard Bank Group. From March 2005 shadow
share options have been issued without funding from Standard Bank Group options.

Commencing in 2005, certain shadow share options have been allocated with a zero strike price, all of which can be exercised after four
years. All other terms of these shadow share options are the same as those described above. The change in liability under the scheme is
accounted for in profit or loss over the vesting period of the shadow share options and includes assumptions about future performance
and leavers.

The provision in respect of liabilities under the scheme amounts to USD7,5 million at 31 December 2010 (2009: USD19,1 million), and
the amount released for the year was USD6,6 million (2009: USD3,1 million charged).

Number

SIH shadow share scheme

2010

2009

Reconciliation

Options outstanding at beginning of the year

22 874 466

28 865 848

Lapsed

(3 285 870)

(2 334 831)

Exercised1

(4 739 919)

(3 656 551)

Options outstanding at end of the year

14 848 677

22 874 466

1

During the year 21 600 (2009: 51 300) Standard Bank Group shares were issued to settle the underpinning SIH Shadow Scheme liability.

The following options granted to employees had not been exercised at 31 December 2010:

Number of ordinary shares

Option price range (USD)

Weighted average
exercise price (USD)

Option expiry period

1 735 816

2,38

2,38

Year to 31 December 2011

1 064 069

1,59

1,59

Year to 31 December 2012

2 096 550

2,83

2,83

Year to 31 December 2013

2 440 452

0 – 2,20

1,94

Year to 31 December 2014

1 841 164

1,79 – 1,89

1,79

Year to 31 December 2015

5 580 126

0 – 1,99

1,99

Year to 31 December 2016

90 500

2,48

2,48

Year to 31 December 2017

14 848 677

The following options granted to employees had not been exercised at 31 December 2009:

Number of ordinary shares

Option price range (USD)

Weighted average
exercise price (USD)

Option expiry period

1 509 161

2,79

2,79

Year to 31 December 2010

1 941 448

2,38

2,38

Year to 31 December 2011

1 336 903

1,59

1,59

Year to 31 December 2012

2 306 652

2,83

2,83

Year to 31 December 2013

3 528 438

0 – 2,20

1,29

Year to 31 December 2014

2 726 164

1,79 – 1,89

1,79

Year to 31 December 2015

9 385 200

0 – 1,99

1,76

Year to 31 December 2016

140 500

2,48

2,48

Year to 31 December 2017

22 874 466

Quanto stock scheme

In early 2008, Corporate & Investment Banking Outside Africa launched a new long-term incentive scheme in the form of a Quanto Stock
Unit Plan. The scheme compulsorily defers a portfolio of the incentive over a minimum threshold for key management and executives.
The scheme was developed after a review of its compensation strategy to strengthen the retention effect of incentive remuneration and
to promote an equity culture through shares, or an equivalent, which is linked to the performance of the overall Standard Bank Group.

In terms of the scheme, qualifying employees are awarded Quanto stock units denominated in USD for nil consideration. Quanto stock
units are linked to the Standard Bank Group share price, but expressed in US dollars. The awards vest over two or three years dependent
on the employee being in service for the period and the employee may call for payment, termed “exercise”, at any point up until the
10-year maturity of the units (except for US taxpayers where it is an automatic settlement date). The scheme includes a discretionary
option for an incremental amount to be paid if the employee is in service for four years and has not exercised the units. The cost of the
award is accrued over the vesting period, normally commencing in the following year to which the awards relate.

The provision in respect of the liabilities under the scheme amounts to USD91,1 million as at 31 December 2010 (2009: USD29,2 million),
and the charge for the year was USD53,8 million (2009: USD25,4 million). The change in the liability due to the change in the group share
price, is hedged through the use of equity options designated as a cash flow hedge.

Units (‘000)

Quanto stock scheme

2010

2009

Reconciliation

Units outstanding at beginning of the year

885

412

Granted

455

551

Lapsed

(105)

(78)

Units outstanding at end of the year

1 235

885

Quanto stock units granted not yet exercised at 31 December 2010:

Number of units (‘000)

Unit expiry period

309

Year to 31 December 2018

489

Year to 31 December 2019

437

Year to 31 December 2020

1 235

Quanto stock units granted not yet exercised at 31 December 2009:

Number of units (‘000)

Unit expiry period

362

Year to 31 December 2018

523

Year to 31 December 2019

885

Deferred bonus scheme (DBS)

It is essential for the group to retain key skills over the longer term. This is done particularly through share-based incentive plans. The
purpose of these plans is to align the interests of the group, its subsidiaries and employees, as well as to attract and retain skilled,
competent people.

The group has implemented a scheme to compulsorily defer a portion of incentive bonuses over a minimum threshold for key SBSA
management and executives. This improves the alignment of shareholder and management interests by creating a closer linkage
between risk and reward, and also facilitates retention of key employees.

All SBSA employees, who are awarded short-term incentives over a certain threshold, will now be subject to a mandatory deferral of
a percentage of their cash incentive into the DBS. Vesting of the deferred bonus occurs after three years, conditional on continued
employment at that time. The final payment of the deferred bonus is calculated with reference to the Standard Bank Group share price
at payment date. To enhance the retention component of the scheme, additional increments on the deferred bonus become payable
at vesting and one year thereafter. Variables on thresholds and additional increments in the DBS are subject to annual review by the
remuneration committee, and may differ from one performance year to the next.

The provision in respect of liabilities under the scheme amounts to R77 million at 31 December 2010 (2009: R21 million) and the
amount charged for the year, including restructuring costs, was R52 million (2009: R14 million), after hedging activities.

Units

2010

2009

Reconciliation

Units outstanding at beginning of the year

1 154 244

Granted

758 122

1 162 261

Exercised

(4 675)

Lapsed

(123 225)

(8 017)

Units outstanding at end of the year

1 784 466

1 154 244

Weighted average fair value at grant date (R)

96,41

53,39

Expected life (years)

3,00

3,00

Risk-free interest rate (%)

6,24

7,89

Dividend yield (%)

3,45

4,42

Black ownership initiative

The group entered into a BEE transaction during 2004 whereby Standard Bank Group and Liberty made investments in cumulative
redeemable shares issued by BEE entities of R4 017 million and R1 251 million respectively (refer to note 16). The proceeds received
from the issue of the cumulative redeemable preference shares were used by the BEE entities to purchase Standard Bank Group and
Liberty shares. The BEE entities initially purchased 99 190 197 ordinary shares of the group. The instruments relating to Shanduka,
Safika and the Community Trust vested immediately. In terms of IFRS 1, the group elected not to apply the provisions of IFRS 2 to
equity-settled awards granted after 7 November 2002, but which had vested prior to January 2005. The instruments relating to the
Standard Bank Black Managers’ Trusts, which are 38 857 919 Standard Bank Group shares, are accounted for over the vesting period
ending 31 December 2010, which resulted in the recognition of a share-based payment transaction. The instrument was valued using
a number of valuation techniques including the Black-Scholes model and discounted cash flow methods. Due to the uniqueness of
the instrument, the mid-point of the range of valuations was used, arriving at a value of R8,50 per Standard Bank Group share at
4 October 2004, the grant date.

The instruments relating to the Standard Bank Black Managers’ Trusts are accounted for over the vesting period ending
31 December 2010, resulting in a total expense in 2010 of R58 million (2009: R35 million) for banking operations and Rnil
(2009: R1 million) for Stanlib. Liberty has applied similar principles and has accounted for an expense of R10 million (2009: R16 million).

Changes to the terms of the preference share agreements referred to in note 16 have resulted in an additional IFRS 2 expense of
R39 million for the year ended 31 December 2010, included in the expense above.